Apple’s Coming Attractions

The rumor mill is churning again, as it usually does when Hollywood is involved: Apple Computer, Inc. is planning to launch a movie store for the iTunes/iPod duo. Interestingly enough, Disney is the only studio on board at this posting time.

Apple’s Showtime announcement is eagerly awaited next week as the prospect of online movie sales via iTunes is a hot topic.

The announcement about Disney supplying movies for iTunes comes as Apple is widely expected to be preparing to upgrade the products in its iPod family, possibly even to introduce a large-screen touch-activated device, according to a London Evening Standard report.

The initial phase of the iTunes service may disappoint some because a larger array of studios is excluded. Reports claim Apple has been unable to agree terms with studios other than those in the Disney empire: Miramax, Touchstone, Walt Disney Pictures and, of course, Pixar.

“Apple CEO Steve Jobs became the largest individual shareholder of Disney stock after selling his movie company, Pixar, to Disney” according to the Standard report.

Other movie studios want more flexibility from Apple. Various reports surmise they aren’t happy with the company’s set price structure (now, where’s the profit coming from?), nor with Apple’s insistence that movies be released the same day as they debut on DVD, according to a report in the Washington Times.

“Some studios even believe Windows Media software offers better copy protection than Apple FairPlay, and studios want digital rights management to shroud their wares.”

But the naysayers shouldn’t hold their breath: Lion’s Gate Entertainment has possibly agreed to make movies available through the service, which may be announced next week.

Negotiations between Apple and other studios continue, but it’s not the first time the company has negotiated deals right down to the wire and made those bloggers bite their nails. Remember when the iTunes Music Store originally launched?

The rumors started swirling after Variety magazine reported that Amazon.com is preparing to enter the movie download market this week with a new service.

Ars Technica has the scoop on Amazon’s video pricing schematic: “Television shows, including The Office, are $1.99, while most movies visible in the screenshots cost about $10. The site currently has titles like Walk the Line, Syriana, and Curious George, so Amazon has apparently convinced the studios to license recent films (Warner and Fox look to be on board), not just the greatest hits of the 80s. Amazon will also rent films, though no word yet on what that will cost. Amazon’s prices appear to be less than the US $10-$15 Apple is rumored to be considering for movie downloads.”

The difference between the services is that Amazon has several price tiers, where Apple has only two. Amazon will offer sales and rentals, but Apple will only offer sales. But because Apple holds the iPod/iTunes monopoly, regardless of price, Apple has a key advantage with movie downloads from the iTunes Music Store—they will play on the iPod. Amazon’s titles won’t.

“A new iPod is going to be crucial to the success of this, along with some way of watching these films on your TV,” said Tom Dunmore of gadget magazine Stuff.
“Apple is notoriously secretive about new products, so they may even be ready to release these products,” Dunmore added. “It’s going to be tough, but this is something that could, over time, be more successful than even their music downloads. There are several companies already doing this, but as we saw with the iPod, Apple has a way of packaging these services to make them very appealing for consumers.”

Other reports state Microsoft is believed to be preparing an online service for Zune, its music and video player which is set for release in November, and experts say, in the spirit of competition, this is likely to result in a fight with Apple for both the film and music market.

Apple and Hollywood execs have declined to comment on the possibility of any licensing deals.